Is cryptocurrency a safe investment in 2018?

You may have been hearing a lot in the news and on social media lately about cryptocurrencies. Bitcoin, the most prominent cryptocurrency and the one you’re most likely to have read about, has been around since 2009. However, it’s only been in the past few months that cryptocurrencies have exploded into the national and worldwide consciousness.

You’ve probably seen the outlandishly dramatic value increases that cryptocurrencies have realized in 2017, and maybe heard stories of people who have become rich investing in cryptocurrencies. But the question now is: Can someone invest in cryptocurrency today and view it as a safe, profitable investment?

The answer is yes, with some caveats. Cryptocurrencies can be a safe investment vehicle, provided you follow certain principles and tips.

Do your research

As of January 2018, there were over 1,000 cryptocurrencies in existence. That number will only grow as time goes on. Many of these cryptocurrencies are unsound and lacking in purpose. They essentially only exist to capitalize on people’s recent enthusiasm for the cryptocurrency.

If you invest in a random cryptocurrency without knowing anything about it, you’re playing the lottery. Sure, you may end up winning, but you just as easily could find yourself with nothing but worthless coins to show for your efforts. If you want to safely invest in cryptocurrency, you need to do your due diligence in picking out the cryptocurrencies you wish to invest in.

Start with a visit to the cryptocurrencies site. Does the site look professionally made? Then, read a little bit about the platform and cryptocurrency being described. What problem or market need is it solving or filling? What makes this cryptocurrency essential in a crowded field. A reputable cryptocurrency should have white papers detailing the technology and the business goals. Finally, check out the team. Do they have a track record of reputable tech innovators?

By checking all these boxes, you can separate the wheat from the chaff and try to identify cryptocurrencies offering real value.

Learn how to trade

The way to acquire, trade and sell cryptocurrencies is primarily through exchanges. Cryptocurrency exchanges are websites which facilitate cryptocurrency transactions, either directly between user and site or between two users with the site acting as a middleman.

There is a wide range of exchanges out there, most of which have their pluses and minuses. Often times, picking the right exchange means figuring out exactly what you want to do as an investor, and then selecting the exchange best tailored to your specific needs.

Bitcoin and Ethereum are two of the many prominent cryptocurrencies you may want to invest in. (Source)

You might want to invest in Bitcoin, Ethereum, or one of the other most prominent cryptocurrencies. If so, an exchange like Coinbase is probably your best bet. Conversely, you might be more interested in more obscure cryptocurrencies, in which case an exchange like Binance may be more up your alley.

Once you’ve chosen an exchange, you should familiarize yourself with the options that exchange offers for you. If you’re simply planning on buying and holding a cryptocurrency, you’ll only need to learn the basic buy and sell functions. However, many exchanges offer far more robust trading options to potentially allow you to increase your chances of profit.

Traditionally, advanced and powerful trading strategies like option spread strategies were solely the domain of the stock market. Now, certain cryptocurrency exchanges are bringing these techniques to the world of Bitcoin and other cryptos, giving traders a number of ways to leverage the market.

Learn cryptocurrency security

Making a sound investment and seeing the value of your cryptocurrencies rise will do you no good if a hacker or thief ends up stealing it before you can use it or sell it. Cryptocurrency is entirely digital and decentralized, and ownership is proven through possession of private keys. Whoever has the private key is the owner of that cryptocurrency, and you need to keep it safe.

Look into purchasing a hardware wallet, also known as a cold storage wallet. These wallets are the safest place possible to store your cryptocurrencies, and if used properly make it virtually impossible for a hacker to steal your cryptocurrency.

If you follow these guidelines and put in the work, cryptocurrency can absolutely be a safe and lucrative investment opportunity in 2018 and beyond.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Robert Cordray is a former business consultant and entrepreneur with over 20 years of experience and a wide variety of knowledge in multiple areas of the industry. He currently resides in the Southern California area and spends his time helping consumers and business owners alike try to be successful. When he’s not reading or writing, he’s most likely with his beautiful wife and three children.